Oil Rises on Retaliation Reports After Hamas Leader Killed
by Bloomberg | Julia Fanzeres and Yongchang Chin
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil extended gains in late trading to more than 5% after the New York Times reported Iran ordered retaliation against Israel for the killing of a Hamas leader on its soil.
West Texas Intermediate climbed as high as $78.55 in the hour after prices officially settled. Wednesday’s gain already had been the largest since October, spurred by the news of Israel’s strike on Hamas’s political leader. The conflict has escalated since last weekend, when a Hezbollah strike in the Israel-controlled Golan Heights killed 12, potentially jeopardizing the ongoing cease-fire talks between Israel and Hamas.
For months, traders were concerned the conflict could spiral into a more devastating proxy war, embroiling the US and Iran and possibly hampering crude exports.
Meanwhile in broader markets, traders embraced risk after the Fed signaled it’s moving closer to lowering borrowing costs amid easing inflation and a cooling labor market.
On the supply side, US crude inventories fell by 3.44 million barrels last week, reaching the lowest level since February, government data showed. Stockpiles have slid for five straight weeks, the longest streak of declines since January 2022. An OPEC+ committee meeting is scheduled for Thursday, with markets split on whether the alliance will proceed with a scheduled output increase next quarter.
The market has been assessing the risk that fresh escalation could affect production and exports, including from Iran. Crude prices hadn’t reacted particularly sharply to recent developments in the war, which started in early October.
“Right now, putting $2 of geopolitical risk premium back in the market is telling me the market is covering shorts, but not worried about a real supply event,” said Rebecca Babin, senior energy trader at CIBC Private Wealth.
In a sign that oil traders are hedging against further conflict, Brent call volumes were the highest since early June on Tuesday. A gauge of market volatility is also the highest since the start of the summer.
Prices:
- Earlier, WTI for September delivery rose $3.18 to settle at $77.91 a barrel in New York.
- Brent for September settlement, which expires Wednesday, rose climbed $2.09 to $80.72 a barrel.
- The more active October contract settled at $80.84.
by Bloomberg | Julia Fanzeres and Yongchang Chin
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas